Tarmac owner sells US distribution division

BUILDING materials giant CRH has sold its American distribution business and bought a German aggregates supplier as it looks to focus on operations with higher returns.

The Dublin-based FTSE 100 company announced the $2.6bn (£2.1bn) sale of its US arm to Beacons Roofing alongside the €600m (£553m) acquisition of Fels, a limes and aggregates business.

Albert Manifold, the chief executive of the company, said the deals showed “CRH’S strategy of adding value through the efficient allocation and reallocation of capital, and in particular the deployment of capital into an attractive growth market in Europe”.

The US distribution business has been part of CRH for 20 years and while it has performed well, the company decided that there was a lack of acquisition targets that would help it grow. The sale price was at 16 times earnings before interest, tax, depreciation and amortisation. The Fels purchase – at seven times earnings – boosts CRH’S existing lime operations in the UK, Poland and Ireland, which currently produce 1.2m tons of the material and have annual sales of €180m.

Fels has nine production sites in Germany, one in the Czech Republic and one near Moscow.

The company said the addition of these to its portfolio would make CRH number two in the European market while also creating the opportunity to grow.

The transactions – which both need sign-off from regulators because of their scale – were announced as CRH posted interim results showing sales up 2pc at €13bn and pre-tax profit jumping 27pc to €517m in the six months to June 30.

CRH, which is best known in Britain for its Tarmac business, said stabilising markets in Europe and growth in America “more than offset” a slowdown in Asia caused by a “challenging” market in the Philippines.

Looking ahead, Mr Manifold said he expected growth in Europe and improving activity in the US in both residential and non-residential markets. The US represents the bulk of sales and the chief executive said he expected improvement in the country to be driven by the FAST Act – a policy put in place by the previous White House administration dedicated to patching up the country’s dilapidated highways.

CRH announced that the dividend would be raised 2pc to 19.2 cents.

Shares in the company closed up 3.8pc at £27.93 yesterday.